Suspect Charged In Capsule Tampering

May 31, 1986|By John Crewdson, Chicago Tribune.

LOS ANGELES — An apparently unsuccessful scheme to profit from the falling stock price of a pharmaceutical concern by poisoning three of the company`s products was uncovered last March when Pacific Stock Exchange officials first noticed

``unusual`` trading activity in connection with the company`s stock, sources close to the investigation said Friday.

The two-month-long investigation that followed the discovery ended Thursday night when FBI agents arrested Edward Arlen Marks, 24, a former auto salesman and stock brokerage employee, as he walked to his car in a parking lot at the Los Angeles International Airport.

Marks is charged with having laced capsules of Contac, a popular cold medication, and two other products produced by the SmithKline Beckman Corp. with rat poison. At his arraignment late Friday afternoon, a U.S. magistrate ordered Marks held without bail and transferred to Orlando, where six of the tainted capsules were recovered, to stand trial.

Executives at the office of Merrill, Lynch, Pierce, Fenner & Smith in San Marino, Calif., where Marks worked briefly last fall, referred inquiries to the company`s New York headquarters.

A spokesman there said Marks had been hired last October as a prospective broker-trainee but had been dismissed after less than a month because of

``discrepancies`` in his employment application.

Among other things, the spokesman said, it had not been possible to verify Marks` claim that he had attended Northeastern University in Boston, which the FBI identified as his hometown.

The arrest is the first in which anyone has been charged with tampering with over-the-counter products since seven Chicago-area residents died from taking Tylenol capsules laced with cyanide in September, 1982.

There have been several such incidents since then. The latest occurred last week, when bottles of Anacin-3 capsules were removed from drugstore shelves in Austin, Tex., following the death from cyanide poisoning of a University of Texas student.

At a news conference Friday, FBI officials said Marks, a resident of suburban Temple City, Calif., was taken into custody following his arrival on a flight from Boston.

Contac, Dietac, an appetite suppressant, and Teldrin, an allergy medication, all made by SmithKline, were withdrawn from sale March 21 after a caller identifying himself only as ``Gary`` telephoned the company and several news organizations to warn that he had laced some of the products with the rat poison Warfarin.

Nine tainted Contac, Dietac and Teldrin capsules were found by FBI agents who followed the caller`s directions to four grocery and convenience stores in Orlando and three others in Houston. Warfarin, a common ingredient in commercial rat poisons, is the trade name for an anticoagulant, or blood-thinning agent.

Investigators said in March that the plastic ``blister`` packages containing the tainted capsules apparently had been sliced open with a razor blade to permit their removal and reinsertion.

SmithKline later announced that it would change the packaging of Contac and Teldrin to make such tampering more difficult and easier to detect.

According to an FBI affidavit filed in federal court here Friday, one of the anonymous calls was made March 19 to ABC News anchorman Peter Jennings`

assistant in New York. A recording of that call was played later for three of Marks` former Merrill, Lynch co-workers, all of whom identified his voice, the affidavit said.

One of the Teldrin capsules seized by the FBI in Orlando also bore a fingerprint that the affidavit described as ``identical to a known fingerprint of Edward Arlen Marks.`` Richard Bretzing, who heads the Los Angeles FBI bureau, declined to say how the agency had obtained a comparison print or whether Marks had a record of previous arrests, but he acknowledged that,

``Obviously, we had prints to compare.``

Bretzing added that the FBI had ``no reason at this point`` to think that Marks was responsible for any other instances of tampering or that anyone had assisted him in the case in which he is charged.

As outlined by the FBI, the scheme attributed to Marks appears to have been neither overly sophisticated nor very successful.

On March 18 and 19, at the same time the telephone warnings were received by SmithKline and news organizations in several cities, Marks allegedly purchased a total of 360 ``put options`` for SmithKline stock on San Francisco`s Pacific Exchange.

A put option is a contract to sell a specific number of stock shares at a certain price by a particular date. If the specified price is higher than the stock`s market value on the date in question, the option can be sold at a profit.

Despite the publicity given the SmithKline recall, however, the company`s stock actually rose, from a closing price of 86 1/2 per share on March 18 to 88 six days later. Bretzing said Marks appeared to have made little or no money from the alleged scheme.